What ministry leaders need to consider as they face retirementFINANCE Wednesday, October 1st, 2008
Key steps for church leaders to consider for a healthier and financially viable retirement.
By Susan Wilhoit
Daily we’re reminded of ways to improve our physical health: eat less fat, exercise, drink more water and reduce stress. While these things are certainly beneficial and important, we can’t neglect our financial health either, especially when it concerns retirement. There are several steps church leaders should consider as they approach retirement.
Take time now, and figure out where you are. Whether you’ve started saving late in the game, or you’re right on target, it’s crucial to know exactly where you stand. Use a balance sheet format and make a list of all your assets and liabilities. Know where all of your accounts are and how they are invested.
It’s important to decide on a plan for the future. Spend some time dreaming about what you want retirement to look like. Will you downsize to a smaller home? Consider moving to another city or state? What will your activities be? How much monthly income will you need to make this dream a reality?
Saving is key
Make saving for retirement a priority. You will likely spend 20 or more years in retirement, and inflation may average 3 percent per year or more. Whatever is getting in the way of saving for retirement may have to wait, whether it is a new car, that long vacation or even the children’s college expenses. Put a percentage of your income into retirement savings automatically each month, increasing it as you can.
Balancing a budget is essential. Make sure that expenses are in line and pay off existing debt. For three months, keep a record of all your expenses and then study the list for ways to reduce cash outflow. Write down all sources of debt and include the balances, interest rates and payments.
It’s vital that you contact your creditors to negotiate a lower interest rate. It may be worth taking money out of a low-interest-earning savings account to get out from under your credit card debt. Consider using a low-interest-rate loan for debt consolidation. For now, always pay an amount greater than the minimum on your credit card balances. In the future, be careful to use your credit card for convenience only, not for purchasing items that you can’t afford.
Your progress should be monitored at least once a year. If your retirement plan offers online tools and calculators, use them to determine your risk tolerance and to make sure your portfolio allocation conforms to it. You may need to adjust your investment mix as you get closer to retirement. Most importantly, don’t panic if you’re behind in your savings. Many adjustments can be made to live less expensively after you leave the workforce, in addition to delaying retirement or working part time in retirement.
Consider emotional impact
But what if retirement isn’t just some far-off goal and is something you’re facing in the near future? While now may be the time to maximize the contribution tools you have at your disposal, also consider the emotional, along with the financial impact retirement may have.
Anticipate some level of grief. There are some things about life before retirement that you will miss dearly. It may be the people with whom you worked or to whom you ministered. It may be the knowledge that what you were doing made a difference in the lives of others. You can expect some sense of loss.
It’s important to recognize that life is not over. Retirement is not a destination, but instead a new beginning. Find ways to reinvest your time, your skill set and your energies. There is a direct connection between activity and longevity. In retirement, you have a great deal to offer to others. Continue to invest yourself.
Learn something new
Do everything possible to improve mental, physical and spiritual health in retirement. Develop a plan of daily exercise. Learn something new at your local community college. You will also have more time to be involved in missions endeavors.
Prepare to adapt and welcome the changes that you’ll have to make. Consider how you might need to budget differently. You should make sure to speak with the Social Security Administration and with your retirement plan provider concerning benefits in retirement. Establish goals for five, 10 and 15 years into retirement. These preliminary efforts will better prepare you and may prevent some unpleasant surprises.
Above all, enjoy life. With proper preparation, fiscally and emotionally, retirement can be the richest years of your journey.
Susan Wilhoit serves as manager of marketing development for GuideStone Financial Resources, Dallas, TX. [guidestone.org]